European car market has yet to reach its lowest point, says Fiat CEO

Fiat CEO Sergio Marchionne believes that the European car market has yet to reach the lowest that it can go. He said that the latest estimates for the auto demand in Europe did not surpass 12.5 million units, which he said is the second lowest level in the past two decades. During an industrial conference last Monday, Marchionne said that European car market right now is “a disaster.”

He said that it hasn’t bottomed out yet and that the prospects are bad. Moody's ratings agency said last week that it believes that light-vehicle demand in western Europe will decline by 3% next year with demand continuing to fall heavily in weak southern European markets such as Italy. In January, Moody's had predicted a 3% increase for the region.

According to Standard & Poor's, the western Europe market will decline by up to 7% this year and increase by only 0.4% in 2013. Standard & Poor's added that the economic slump is applying pressure on PSA/Peugeot-Citroen, Fiat and Renault, the ratings of which are all in the speculative-grade category. The agency said that the poor demand affected customers, together with austerity measures, intense price rivalry, and high costs.

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